Free World Notes

You may write the author, Tom
Hull <ftwalk@contex.com>. Hull is
also the author of the Ftwalk programming language, a script
programming language which is free software available for Unix
systems.

In general, this critique reflects a more general line of thought,
which is based on the recognition that the inefficiencies and ulterior
motives in our current modes of production require much unnecessary
work to produce products and services of often dubious merit for
grossly inflated prices, effects which diminish the quality of our
lives and the worth of our work. Nonetheless, my proposal here is not
especially radical: it does not challenge the precepts of intellectual
property; it requires no political action (not even the application of
antitrust law); it can be initiated by a small group of people, and to
some extent simply builds on work already done by various individuals
and groups.

Some paragraph notes:

Commercial software companies typically divide their costs into
several sectors: development; manufacturing; marketing/sales;
service; general and administrative. Development costs are usually
less than 20% of revenues. By far the largest cost is
marketing/sales, so most of what the customer is actually paying for is the
persuasion to convince the customer to pay so much for something
that costs so little to develop, and practically nothing to
reproduce and deliver.

More expensive software often includes after-the-sale service,
which should be considered a marketing/sales cost, since it props
up an extravagant price structure. Service should be considered a
separate cost, independent of development. Free software is always
delivered with no service, and customers who need service can
obtain help independently, since the inner workings of the software
are public knowledge.

Media companies have comparable cash flows, but necessarily work
within the technical standards of their media. Consuming their
products does not in any way prevent or even disincline one from
consuming competitive products.

Microsoft likes to expand its operating system to eliminate the
market for add-on software, such as for disk compression and
networking. Microsoft's claim that IE is part of the operating
system is spectacularly spurious.

Microsoft's dominance is at least partly due to the lack of any
significant challengers. Apple and IBM used their operating systems
to lock customers into their hardware, and would at any rate have
been rejected by the rest of the PC industry, which at least with
Microsoft got access to the same product. Unix vendors have stuck
steadfastly to higher priced markets, avoiding direct competition,
even though NT is aimed directly at destroying Unix. The longer
Microsoft goes without serious competition, the harder it gets to
mount any such competition.

The last sentence is a slight exaggeration. Many capitalists do in
fact realize that they will never be in the position to wield the
sort of power that Microsoft commands, and as such have no use for
the megalomania that goes with such power.

The main point, however, is that under current circumstances no
sane investor will directly challenge Microsoft. The cases in
other industries where challenges are made to dominant companies
depend on the discovery of some significant cost advantage (e.g.,
MCI's challenge to AT&T), but cost advantages are essentially
impossible in software, unless you're willing to forego all your
margin, a position no investor will take.

Antitrust laws work more for the protection of other businesses
than to protect consumer interests, although consumers generally
do benefit from increased, more even handed competition, at least
in the long run. In the short run consumers may benefit more from
crippling price competition. Netscape, for example, having gained
a dominant market share in its niche, still cannot raise its prices
because of Microsoft's competition, which is a windfall of sorts
for customers.

We talk much about the advantages of “letting the market
decide,” but most business activity is oriented toward rigging
the market. Look at any business plan and the key section will be
something like “Barriers to Competition,” because
competition kills profits, and successful companies are the ones that
avoid competition, or at least are able to dictate its terms.

The key thing here is that the free software must have at least the
same level of quality and utility as the commercial software that
it challenges, which means that it must be professionally designed
and developed, tested and supported. Which means that free software
must move well beyond its current niche as an academic hobby, to a
point where it is supported by well-financed organizations that can
attract and support quality workers.

Of course, Microsoft (and all other commercial software companies
so threatened) will do their best to compete with free software,
and can be expected to do so as desperately as they compete with
everything else. There will be many arguments floated as to why
commercial software is better than free software. Many of these
arguments are variations on the master salesman's boast that he can
sell more $10 bills for $20 than a less convincing huckster can
give away. Such arguments can be defeated by establishing that free
software is quality software and makes sound economic sense. Some
arguments are more substantial: commercial software companies have
a huge head start; some such companies have convinced many users to
trust their brands; the true costs of software include the time
that it takes to learn and use, so no software is really cost-free;
the investment that users and companies have in commercial software
can make switching painful; many people still regard commercial
software as something of a bargain.

One issue that needs to be recognized and understood is the notion
that free software, openly published in source form and freely
inspected by anyone who has an interest or desire to do so, is
worthy of far greater trust than closed, proprietary, secretive
software. I for one found the installation of Microsoft's Internet
Explorer to be a very scary experience: the computer running
totally out of my control, recongifuring itself, plugging into
Microsoft's own web sites, setting up preferences and defaults
according to Microsoft's business machinations.

Sometimes I wonder whether Microsoft's underlying goal isn't simply
to make the world safe for computer viruses. I'm not an especially
paranoid person, but how can you ever know?

Consumers nowadays are so often (and so effectively) fleeced that
there is much resistance to paying for something you can get away
with not paying for, so this will be an uphill educational battle.
There is a game theory problem here: Who should I commit to paying
for a development which I can get for nothing if only I wait for
someone else to pay for it? But if everyone waits, no one benefits.

There are other ways to handle this level of funding, such as
imposing taxes on computer hardware (sort of like the gas tax is
used to build roads) or even on commercial software (sort of like
using cigarette taxes for public health). Developing countries, in
particular, should support free software development, since the
notion of intellectual property must appear to them as one more
form of tribute to the rich. These approaches require political
efforts that are sure to be contested and hamstrung. I'm inclined
to start small, start voluntarily, and see how far reason and
civility takes us.

It should also be emphasized that there is at present a substantial
amount of free software already written and available, and that
there are many organizations and individuals that have contributed
to the development and dissemination and support of free software.
What is missing is a systematic approach to funding development,
and a strong and consistent system for user feedback and
direction.

I would estimate that free software can be developed to quality
standards that meet/exceed commercial software for less than 25% of
the price of equivalent commercial software. This estimate is based
on common R&D expenditure levels plus a generous amount for those
organizations which coordinate development and promote use. Given
that free software is not compelled to become obsolescent (it can
continue to be used as long as it is useful, whereas commercial
software must obsolete old product to promote the sales of new),
the costs for free software will decline over time, sharply except
for the cases where new needs arise.

Much of this work is already being done. What's missing is not so
much the people or even the organization as a coherent sense of the
economic imperatives. To date, free software has largely been
driven by political sensibilities and the traditions of academic
freedom, which have led it into a hodge podge of areas, many of
which have very little impact on common needs and usages. (Some,
such as the Web, have had major impact, and as such have attracted
enormous commercial attention.) However, the driving force behind
free software must be economics: why do we spend so much money
propping up empires when all we really want are clean, simple
programs that do our work? And why do software professions have to
work for commercial companies when their skills and work are more
immediately needed by users?

The argument that large companies (government, any organization
that spends serious money on software) should routinely support
free software development is strong and well focused. Even if such
an organization never directly used free software, its existence
would provide a damper on prices and a strong bargaining point with
commercial software vendors. It is a win/win bet: free software,
cheaper software, more options, more competition.

It is completely obvious that free software organizations must be
international in scope. It seems likely that most of the support
for free software will come from outside the US, perhaps by an
overwhelming margin.

This proposal does not dispute the rights of intellectual property
owners. Under this proposal it should be possible to buy or license
technology where appropriate, and inventors should consider the
possibility of selling their inventions to the free world. Whether
intellectual property rights in fact encourage innovation in any
useful way can be debated separately.

Another aspect of this proposal is that it does not try to kill off
the profit motive in software development. As I envision it, most
of the free software work would be done by small companies bidding
on contract proposals, presumably with the intent of making a
profit. (The companies are likely to be small because they won't
need to float a large marketing/sales organization, which is the
main advantage big software companies have over small ones. Also
because the free software networking organizations should work for
providing sharable resources, such as capital and services, saving
small companies from having to overextend themselves.)

My proposal is that free software will start out aiming to produce the
most basic and most broadly used software: it will in effect harvest
the “cash cows” of the commercial software industry,
rather than attempt to innovate at the fringes of development. (Of
course, innovators are more than welcome to contribute.) Beyond free
software there will still be shareware and commercial products, which
will to some extent compete with free software and to a larger extent
open up new niches where free software is not yet available. The free
software industry will provide a damper on the sort of prices that can
be charged. It will also help lower the costs of all software
development, and may eventually provide a salvage market for
discontinued commercial software. Shareware may be a fruitful ground
for speculative software development, with the goal being to develop
and popularize a new product that can be sold off to the free
market.

Finally, I believe that no restrictions should be placed on the use
of free software: that it can be repackaged, sold, incorporated
into commercial products. Free software will reduce the development
costs of commercial software, which will help make commercial
software cheaper, better, more competitive: all good things. The
goal after all is better, cheaper, more usable and useful software:
victory is not measured in bankruptcies. The impulse to segregate
free software from commercial software is doomed, as is the impulse
to isolate free software from commerce. We live in a jungle of
commerce, which no one can truly flee from, regardless of how
offensive it may seem. The proposal here is to start to take short,
deliberate, sensible steps toward reclaiming parts of that jungle
for everyone's use and betterment.

This implies, of course, that (following the Reagan demonology)
Microsoft et al. are “The Evil Empire.” That's a joke, of
course, but if it didn't harbor a shred of truth it wouldn't be
funny.